The AUD to GBP (AUDGBP) pair continued the upward trend started on April 2 as the market continued to favour the Aussie than the sterling. The pair is up by more than 15% since April, making it the best bull run for the aussie in modern times.
AUDGBP soars on positive sentiment
The AUD to GBP pair rose by more than 20 basis points today as sentiment continued to favour the aussie. The AUD has also risen sharply against the USD in recent weeks.
There are three main reasons why the Australian dollar has continued to rally. First, the country has been significantly effective in fighting the coronavirus pandemic. Indeed, the ministry of health reported just 8 new cases today. In total, only about 8,000 people were diagnosed by the illness, which is a significant feat. Also, the number of active cases has continued to fall.
Second, the Australian central bank has been the least dovish in the developed world. While the bank has left interest rates so low, it has also put limits on its quantitative easing program. Just this week, it announced that it was holding-off on any more asset purchases. This is unlike other central banks like the Fed that are printing unlimited amount of money.
Finally, the AUD to GBP has soared because of Australia’s close relationship with China. As the second-biggest economy in the world, China is incredibly important for Australia because that is where it sends most of its goods. Now, with China recovering, demand for products like Iron ore have been on high demand.
AUD to GBP rises because of Brexit
Another reason why the AUD to GBP pair has been rising is because of Brexit. In recent days, the risks of a no-deal Brexit has been rising because the two sides have been having significant differences. For example, the UK has rejected calls for being under the European Union regulations. Also, the EU has insisted that the UK must agree to share its fishing waters with other EU members. This is important because most fishermen in the EU catch most of their fish there.
The AUD to GBP pair is trading at 0.5502, which is the highest it has been since October 2019. The price is along the 78.2% Fibonacci retracement level and above the short, long, and medium-term moving averages. Also, the momentum indicator has remained above the neutral line of zero. Therefore, a break above the current resistance will push the pair higher.
On the flip side, a move below the 61.8% retracement level at 0.5355 will mean that there are more bears who will be keen to push it lower.